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Thursday, February 24, 2011

Duke's Cozy Relationship With IURC Head Extended To CEO Rogers

The Star's John Russell continues his excellent reporting on the cozy relationship Duke's top executives enjoyed with the IURC commission members and its staff. Today, his latest reporting shows e-mails and meetings that tie Duke CEO James Rogers to the developing scandal. Legal experts are telling Russell the meetings and communications violated ex-parte rules governing communications of parties with officials during IURC administrative matters.

James Rogers, the chairman and chief executive of Duke Energy Corp., wanted a private meeting last February with Indiana's top utility regulator to talk about soaring construction costs at the company's Edwardsport power plant.

So one of his lieutenants -- Duke Vice President James Turner -- sent an e-mail directly to David Lott Hardy, then chairman of the Indiana Utility Regulatory Commission.

"Rogers and I would like to have breakfast with you this coming Thursday if you're available," Turner wrote.

The two men juggled their calendars and settled on a time. "Don't tell the [other] utilities I'm being accommodating -- bad for my reputation," Hardy wrote to Turner.

Despite state law that sharply restricts private communication between regulators and company officials on pending cases, Rogers, Turner and another Duke executive met last February for breakfast with Hardy at the Capital Grille, a swanky Downtown restaurant where the menu features eggs Benedict with lobster for $21 and filet mignon hash for $15.

During the meeting, the Duke executives told Hardy that the power plant was facing a $530 million cost overrun -- the second major overrun in less than two years. All told, that would push the price tag up nearly $1 billion more than the IURC originally approved in 2007 . . .

The breakfast meeting at the Capital Grille -- and several others like it -- are now raising serious questions about whether Duke's top executives exerted undue influence on utility regulators to pass along steep overruns to ratepayers to bail out a project plagued by rising costs.

Duke officials called the meetings a "courtesy heads-up," not meant to influence the process.

But e-mails obtained by The Indianapolis Star in recent months show that top executives at the utility and IURC had a long, cozy relationship that went beyond simple courtesies.

Duke officials forced its VP James Turner to resign after the Star disclosed e-mails detailing his inappropriate relationship with IURC officials and the role he played in hiring the commission's top legal counsel Scott Storms. Will these latest disclosures force the giant utility to call on Rogers to resign as well? Russell notes sometimes cryptic message between Duke officials and IURC officials trying to cover their tracks:

A few hours after the breakfast meeting at the Capital Grille, Hardy sent Rogers and Turner an e-mail, with the subject line: "terseness." The e-mail said: "Who ever reports on the meeting might consider a one word characterization and a number where you can be reached."

Turner responded: "Got it."

Duke declined to comment on that mysterious exchange. "I don't want to speculate on what Hardy might have been referring to, and I can't find records of much of a response from us," Protogere said . . .

A few months later, on May 6, Hardy sent Turner a message: "Is there a number where you would get a fax without the world seeing it?"

Turner replied: "My home fax isn't working, so it could be tricky. How about a scan and e-mail?"

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